Correlation Between Bassett Furniture and TFI International
Can any of the company-specific risk be diversified away by investing in both Bassett Furniture and TFI International at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bassett Furniture and TFI International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bassett Furniture Industries and TFI International, you can compare the effects of market volatilities on Bassett Furniture and TFI International and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bassett Furniture with a short position of TFI International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bassett Furniture and TFI International.
Diversification Opportunities for Bassett Furniture and TFI International
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bassett and TFI is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bassett Furniture Industries and TFI International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TFI International and Bassett Furniture is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bassett Furniture Industries are associated (or correlated) with TFI International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TFI International has no effect on the direction of Bassett Furniture i.e., Bassett Furniture and TFI International go up and down completely randomly.
Pair Corralation between Bassett Furniture and TFI International
Given the investment horizon of 90 days Bassett Furniture Industries is expected to under-perform the TFI International. In addition to that, Bassett Furniture is 1.04 times more volatile than TFI International. It trades about -0.01 of its total potential returns per unit of risk. TFI International is currently generating about 0.04 per unit of volatility. If you would invest 10,308 in TFI International on October 7, 2024 and sell it today you would earn a total of 3,056 from holding TFI International or generate 29.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bassett Furniture Industries vs. TFI International
Performance |
| Timeline |
| Bassett Furniture |
| TFI International |
Bassett Furniture and TFI International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bassett Furniture and TFI International
The main advantage of trading using opposite Bassett Furniture and TFI International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bassett Furniture position performs unexpectedly, TFI International can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in TFI International will offset losses from the drop in TFI International's long position.| Bassett Furniture vs. Hooker Furniture | Bassett Furniture vs. Flexsteel Industries | Bassett Furniture vs. Haverty Furniture Companies | Bassett Furniture vs. La Z Boy Incorporated |
| TFI International vs. Old Dominion Freight | TFI International vs. ArcBest Corp | TFI International vs. Marten Transport | TFI International vs. Werner Enterprises |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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